Rell won’t meet goal to sell state assets

While accusing state legislators of shirking their fiscal responsibilities, outgoing Gov. M. Jodi Rell’s administration reported just three months into the fiscal year that it wouldn’t meet its commitment to sell more than $40 million in state assets to help balance the budget.

Despite being charged with raising $45 million from assets sales this fiscal year, the governor’s budget agency, the Office of Policy and Management, reported in mid-October it expected just $3 million in sales before the fiscal year ends on June 30.

And a statement from Rell’s office issued late Tuesday said despite that dramatic revenue adjustment, proceeds from asset sales might fall short even more, topping out at $200,000 this fiscal year.

A $42 million shortfall in asset sales was built into the consensus revenue forecast delivered to the legislature’s Finance, Revenue and Bonding Committee on Oct. 15. That projection is prepared both by the OPM and by the legislature’s nonpartisan Office of Fiscal Analysis.

But that forecast only lists broad revenue categories. The asset sales target was not identified by name, but rather was one of several items used to calculate “miscellaneous” General Fund revenues.

The Rell administration has not cited any problems tied to asset sales since the fiscal year began in reports either to legislative leaders, the finance committee or to the state comptroller’s office.

“Clearly it would have been helpful if this issue had been highlighted in the same way that the administration has highlighted other areas” of concern, Senate Majority Leader Martin M. Looney, D-New Haven, said Tuesday.

One of those “other areas” was raised just two weeks after the fiscal year began on July 1 when the Rell administration took aim at the Democrat-controlled legislature, and specifically its Commission on Enhancing Agency Outcomes. That panel, created in 2009 was charged with finding $50 million in cost-saving proposals by Dec. 31 of this year.

Rell’s budget director, Brenda Sisco, wrote to commission leaders, arguing they should have completed their work before July to ensure the $50 million in savings could be achieved before the fiscal year ends next June 30.

“Fiscal year 2011 is already underway and unfortunately the administration still has no guidance or specific plan from the commission or the General Assembly for achieving these savings,” Sisco wrote. “Waiting until Dec. 31, 2010 for your group to release recommendations will leave less than half of the fiscal year to implement any proposed restructuring, and will result in unachievable savings.”

The administration has repeated that concern frequently in its monthly budget reports to the comptroller’s office.

The commission tentatively tentatively endorsed more than $250 million in new cost-cutting measures spread across two fiscal years on Monday, particularly targeting state health care services for the poor and elderly. A final report is planned for Dec. 15.

Rep. James F. Spallone, D-Essex, House chairman of the commission, said Tuesday it was “disappointing” that the administration was relatively quiet about its own fiscal challenges while chastising his panel.

“Perhaps it became apparent to them early on that the target wasn’t going to be met, but I’m still disappointed that the governor chose to criticize us,” Spallone said. “The only way we’re going to dig ourselves out of the budget hole we face is with absolute candor and open communication.”

The “budget hole” Spallone cited is a built-in deficit for the coming fiscal year that has been projected as high as $3.67 billion, or nearly one-fifth of all current spending.

Looney said that while many some officials believed the $45 million sales target was ambitious, “never did the administration say it was unreachable,” adding that Rell’s administration should explain whether it is still working to sell state assets and why it decided it couldn’t fulfill its responsibilities so early in the fiscal year.

Rell’s office issued a written statement late Tuesday afternoon indicating it “has not abandoned its efforts to raise the… forecast amounts,” but said budget staff felt in October that the sales goals “were unlikely to be met, therefore OPM scaled back the estimate significantly.”

surplus sales

The statement didn’t explain why administration officials decided in October they couldn’t meet the $45 million target built into the budget Rell signed in May–or even the level of sales achieved last fiscal year.

But it noted that the administration asked last spring for “certain legislative changes to streamline the (asset sales) process, but the legislature took no action.”

The governor’s office also wrote that regardless of the mid-October report, the administration now believes revenues from asset sales will be even worse, topping out at $200,000.

Both the governor and legislature agreed on the unusual step of selling state assets as one of several fiscal maneuvers employed over the past two years to avert the need for tax hikes or spending cuts.

The legislature directed the administration to raise $15 million by selling surplus land, buildings, and other assets last fiscal year, and triple that amount this year.

According to Rell’s budget office, $12.9 million worth of assets have been sold since July 1, 2009, but most of the proceeds were applied toward last fiscal year’s $15 million target.

Nearly two-thirds of that total, $8 million, came from one sale, involving land and buildings on the site of the Seaside Regional Center in Waterford, a former state facility for developmentally disabled individuals.

The administration also raised $305,000 by selling an armory in Bristol and $90,000 from the old Nathan Hale building in Windham. The remainder was raised through the sale of about two dozen vacant parcels and single-family homes taken by the state over the years.